Suntory to buy Beam Inc for $16bn

By Kevin Rozario |

Suntory Holdings plans to buy US drinks group Beam Inc for $13.6bn ($16bn including debt) which will make the Japanese company the third biggest premium spirits player in the world.

 

Japan’s biggest liquor house is paying $83.5 a share for the fourth biggest spirits group in the world, 25% more than Beam’s closing price on Friday of $66.97.

 

Illinois-based Beam has a string of regional and global brands, such as bourbons Jim Beam and Makers Mark, Teacher’s and Laphroaig whiskies, Courvoisier Cognac and Sauza tequila that will strengthen Suntory’s portfolio and distribution – especially as it enters emerging markets. Suntory’s own brands include Japanese whiskies such as Yamazaki, Hakushu, Hibiki and Kakubin, plus Bowmore Scotch whisky and Midori liqueur.

 

Nobutada Saji (right), President and Chairman of Suntory’s Board, says: “I believe this combination will create a spirits business with a product portfolio unmatched throughout the world and allow us to achieve further global growth.” He adds that Beam’s management and employees “will play an integral part in the growth of the business”.

 

Matt Shattock (left), Beam’s President & Chief Executive Officer recently said: “We’ve turbo-charged our brands with significant investment with the result being great momentum in our business and now we are primed to deliver sustainable growth.”

 

WHISKY EXPERTISE

Today he adds: “With particular strength in Bourbon, Scotch, Canadian, Irish and Japanese whisky, the combined company will have unparalleled expertise and portfolio breadth in premium whisky, which is driving the fastest growth in Western spirits.

 

“Our combined global routes to market will expand our joint distribution footprint. Backed by the expertise and the financial resources of Suntory, Beam looks forward to working with the Suntory team to continue outperforming our global market.”

 

No senior management or operational changes are, so far, being proposed. However, Suntory, last month, created a London-based company whose purpose is to “comprehensively manage our European business” according to a statement, although Suntory says initially it is primarily aimed at administering its soft drinks operations. The company will be formally established on 20 January.

 

In 2013, Suntory’s spirits business – largely due to the breaking of new ground in the ready-to-serve category and growth of core brands including Kakubin, Yamazaki, Hakushu, and -196°C – saw +3% growth compared to the previous year, in line with Beams growth for the first nine months of 2013.

 

Suntory said last week: “In 2014, we will aim for +1% growth compared to the previous year.”

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